Strategic Management: Chapter 2

A statement about what an organization ultimately wants to accomplish; it captures the company’s aspiration.

Mission

Description of what an organization actually does, what its business is, and why it does it; this can be customer-oriented or product-oriented.

Values

How the firm plans to accomplish its goals.

Strategic Management Process

Methods by which managers conceive of and implement a strategy that can lead to a sustainable competitive advantage.

Strategic Intent

The staking out of a desired leadership position that far exceeds a company’s current resources and capabilities.

Sony Corporation started out as a…

small Japanese company after World War 2 that invented an electric rice cooker and launched the world’s first pocket radio.

Customer-Oriented Missions

Define the firm in terms of solutions for customers. For example, Disney’s is to “make people happy.” Customer-oriented missions provide enhanced strategic flexibility and are not the same as “listening to customers”.

Product-Oriented Missions

Define the firm in terms of products or services. For example, U.S. Railroads’ mission is to have the “safest North American railroad.”

Do mission statements help gain and sustain competitive advantage?

The results are inconclusive. Firms need strategic commitments to succeed.

– Works reasonably well in a stable environment.
– Strategy is viewed as a scientific, engineering, or programming problem.
– The past predicts the future.
– Strategic thinking is separated from implementation.

The Strategic Management Process: Scenario Planning

Managers envision different what-if scenarios to anticipate multiple paths. The company implements the most probable option and then keeps the other scenarios as back-up in the event of changes. “The future cannot be known, but you can predict trends.”

Dominant Strategic Plan

The strategic option that managers think most closely matches reality at a given point in time.